I'll see if I can shed some light as I've worked in an engineering company recently. Marketing is now enemy #1 in most of them. I think this is a FANTASTIC step on MS's part. As you mentioned, MS's marketing has been lacking (for 10 years or so by my count). The reason is that Marketing in many engineering companies have taken over. Rather than selling and making suggestions, they've been giving orders instead, which leads to a lot of "look - squirrel!" type of reactionary actions. Its what I call, "Followship" instead of "Leadership". It destroys any sort of innovation (and morale) from the engineering staff, since they just take orders from the equivalent of Dilbert's pointy haired manager... It also leads to engineering sitting in confusion waiting on their current project to get killed because it's no longer the "hipness du'jour". Nothing worse than having a bunch of your work just thrown out, because a marketing type got a new bee in their bonnet about what is "hot" right now. It's like working for Paris Hilton...
* "Sinofsky's organisation seems a little strange according to this description - one coder, one tester, one PM? - but he does seem to be turning in the goods."
This is called the "Agile" program management method or some variant thereof. Popular in the open source community, and increasingly in corporate dev as well, it does allow for faster time to market, *if* marketing is removed from the equation. It sounds like MS is removing Marketing from the equation. :) It allows you to plan/design/prototype faster, and with QA's input at every step should you be about to pull a boneheaded move as a developer. It allows to break up giganto projects into manageable portions as well and have it come together nicely and more quickly, *if* handled correctly... Big *IF* there though...
* "But making *60%* of your staff "uncomfortable"? That strikes me as a really easy way to destroy morale..."
Agreed x10, but this *might* be a step up. I would venture to guess that it might be 80-90% of engineering staff already being generally unhappy right now to due Marketing interference in their day to day operations.
Overall I think this is great news for MS, and maybe for the rest of the tech industry where marketing has been running roughshod over the development organization in the company. Probably bad news for all the folks with marketing degrees though. :)